May

15

How miserable are we, really?

May 15, 2008 |

Have you ever heard of the Misery Index?

It is a term referring to the number you get when you add the inflation rate with the unemployment rate, and it is used to gauge the amount of economic pain generally being experienced by Americans at a given point in time.

To give you a frame of reference, the low-point for the Misery Index in recent history was 1998. At that time, it was 6.1. In 1980, the Misery Index reached a post-World War II high of 20.6.

According to the official numbers published by the federal government, the current Misery Index stands at 8.9 (combining 5% unemployment with 3.9% inflation for April). But, according to this analysis by CNNMoney.com, many experts believe that both the inflation rate and the unemployment rate are routinely understated in the official numbers.

The conclusion they reach — that the Misery Index might be as high as 16.2 — certainly makes sense of the way the consumer confidence indexes have been behaving lately. But, of course, economic pain is not evenly distributed across all socio-economic brackets in this country.

The question we have to ask ourselves is not even how close to reality that 16.2 Misery Index is for us, so much as how accurately does it reflect what’s going on with our customers.

What do you think?

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